How COE Went From $30K to $120K in 15 Years

In the early 2010s, after the post-GFC surge had cooled and the 2013 MAS cooling measures had taken effect, COE premiums for Category A settled into a range around $30,000 to $40,000. It felt expensive at the time. Looking back from March 2026, with Cat A at $111,890, Cat B at $115,568, and Cat E at $118,119, those prices seem almost quaint.

How did Singapore's car ownership premium quadruple in roughly fifteen years? The answer is not a single event or a single policy — it is the compounding effect of five structural forces, each reinforcing the others. Understanding these forces is essential for anyone trying to anticipate where premiums might head next.

Force 1: Zero Vehicle Growth — The Binding Constraint

The single most important structural driver of COE prices is the vehicle growth rate, and since February 2018, that rate has been set at 0% for Categories A, B, and D. This seemingly simple policy decision has profound implications.

Zero growth means that the total vehicle population is capped. The only way to put a new car on the road is to replace one that has been taken off. Every new COE issued corresponds to a vehicle that has been deregistered. In practical terms, this transforms the COE market from a system that manages growth into one that manages replacement — and the economics of replacement markets are fundamentally different.

From Growth Management to Rationing

When the vehicle growth rate was positive (it was 3% per year in the system's early decades, then 1.5%, then 0.5%), there was an inherent buffer. The total number of COEs exceeded the number of deregistrations, providing some slack. At 0%, that buffer disappears entirely. Supply becomes exactly equal to demand replacement, with no room for net new vehicles.

But demand is not static. Singapore's resident population has grown from 3.9 million in 2010 to over 4 million. GDP per capita has risen significantly. Dual-income households are more common. The number of people who want and can afford cars grows every year — but the number of cars allowed on the road does not.

This widening gap between desire and availability is the primary engine pushing premiums upward. You can track the latest quota figures on our Quota Watch page.

Force 2: Population Growth vs. Fixed Supply

Singapore's population dynamics create a steadily increasing base of potential car buyers bidding against a fixed — or even shrinking — supply of COEs. This is not just about raw numbers. It is about the demographic composition of that population.

The Rising Middle Class

Median household income in Singapore has risen steadily, and the share of households in the upper-middle and high-income brackets has expanded. More families can afford the total cost of car ownership, even at elevated COE premiums. The demand curve has shifted rightward — more buyers at every price level.

Dual-Income Pressure

The rise of dual-income households has been particularly significant. In the 1990s and early 2000s, a COE premium was typically evaluated against a single income. Today, many bidders are drawing on two professional salaries. A $100,000 COE premium is painful but manageable for a household earning $15,000-$20,000 per month — and there are more such households than ever before.

Immigration and Permanent Residents

Singapore continues to attract high-earning professionals and entrepreneurs from abroad. Many of these newcomers, accustomed to car ownership in their home countries, enter the COE market and add to demand. The PR and citizenship pathways mean that the pool of eligible buyers grows incrementally each year.

Force 3: The EV Demand Shock

The transition to electric vehicles has created a structural demand shift that the COE system was not designed to accommodate, and it has disproportionately affected Category B premiums.

Why EVs Push Up Cat B

Under the COE category system, most electric vehicles fall into Category B because their power output exceeds the 97kW threshold for Category A. This is significant because many popular EVs — from the Tesla Model 3 to the BYD Atto 3 — are vehicles that, in their petrol equivalents, would be Category A cars. A family sedan that would have been a 1.5-litre Cat A car is now an EV with 150kW+ that competes in Cat B.

This has shifted demand from Cat A to Cat B, pushing up Cat B premiums. The effect has been dramatic: Cat B premiums, which historically traded at a modest premium to Cat A, have at times surged well ahead. The narrowing and occasional inversion of the Cat A/Cat B spread is a direct consequence of EV adoption.

Government Incentives Amplify the Effect

The Singapore government has actively encouraged EV adoption through various incentive schemes, including the EV Early Adoption Incentive and rebates on Additional Registration Fees for cleaner vehicles. These incentives make EVs more attractive relative to ICE vehicles, drawing more buyers into the EV segment — and therefore into Category B. The policy goal of greener transport directly conflicts with the COE system's attempt to limit vehicle numbers, creating upward pressure on premiums.

Force 4: The PQP Floor Effect

The Prevailing Quota Premium, or PQP, is one of the most underappreciated structural forces in the COE market. Understanding it is critical to understanding why premiums resist downward pressure.

How PQP Works

When a 10-year COE expires, the owner has two choices: deregister the vehicle and scrap or export it, or renew the COE by paying the PQP. The PQP is calculated as the moving average of recent COE premiums for that category. It represents the cost of keeping your existing car on the road without going through the bidding system.

The Self-Reinforcing Cycle

Here is the crucial dynamic: when COE premiums are high, PQP is high. When PQP is high, renewal becomes expensive. When renewal is expensive, more owners choose to deregister rather than renew. When more vehicles are deregistered, more COEs become available for the next period — but this additional supply is a consequence of high premiums, not a cure for them.

More importantly, the PQP creates a psychological and economic floor under bidding premiums. If the PQP for a Category A COE is $80,000, few bidders will bid significantly below that level, because the PQP represents the market's consensus of what a COE is worth. The PQP anchors expectations and prevents premiums from falling as far as they otherwise might during demand slowdowns.

After years of six-figure premiums, the PQP itself is now well into six figures for most categories. This means the floor under bidding premiums is structurally higher than it has ever been. Track the latest PQP values on our PQP tracker.

Force 5: COVID Quota Compression

The COVID-19 pandemic and its aftermath delivered a powerful one-time shock to the COE supply mechanism that continues to reverberate through the market years later.

The April-May 2020 Suspension

When Singapore entered its Circuit Breaker in April 2020, COE bidding was suspended for two months — the first such suspension in the system's history. During April and May 2020, no new COEs were issued. But vehicle deregistrations continued (some vehicles reached the end of their road tax validity period regardless of the pandemic).

This two-month gap created a hole in the supply pipeline. The quota formula — particularly after the February 2023 revision to a rolling average of deregistrations in the previous four quarters — means that the COVID suspension depressed available supply for subsequent periods. Fewer COEs issued during COVID meant fewer vehicles reaching their 10-year expiry in the 2030-2031 window, which will in turn reduce the deregistration-based quota at that time.

Semiconductor Delays Extend the Impact

The global semiconductor shortage that followed the pandemic created additional distortions. Many COE holders who won bids in 2020-2022 faced extended delivery times for their vehicles. Some COEs expired before vehicles could be delivered, requiring re-bidding. This recycled demand added further pressure to an already constrained supply.

The Catch-Up Demand Surge

When the economy reopened and semiconductor supply normalised, the backlog of deferred purchases hit the market all at once. Buyers who had waited through the pandemic, the Circuit Breaker, and the supply chain disruptions all converged on the bidding system simultaneously. This demand surge, meeting a compressed quota, drove premiums through the $100,000 barrier in October 2023 — with Category E hitting the all-time record of $152,000 that same month.

The Compounding Effect: Why These Forces Multiply

Each of these five forces is significant on its own. Together, they compound in ways that make the upward pressure on COE premiums much greater than any single factor would suggest.

• Zero growth + population increase = a growing number of buyers competing for a fixed pool. This is the fundamental supply-demand imbalance.
• EV demand shift = Category B absorbs buyers who would have been in Cat A, concentrating demand and pushing up both categories.
• PQP floor = high premiums raise the floor, preventing mean-reversion and ratcheting prices upward with each cycle.
• COVID compression = a one-time supply shock that removed certificates from circulation and created a demand backlog.
• All of the above + rising incomes = the demand curve shifts faster than any supply response can accommodate.

The result is a system where every temporary decline in premiums is met by buyers rushing in, and every policy intervention to increase supply is eventually absorbed by the relentless growth in demand. The trajectory is structurally upward.

Can Anything Reverse the Trend?

Understanding the structural forces does not mean that premiums will rise forever in a straight line. Several factors could moderate or temporarily reverse the trend:

The 20,000 Additional COEs

From February 2025, LTA has been injecting 20,000 additional COEs into the system. This is a significant supply increase and has the potential to moderate premiums. However, historical precedent suggests that additional supply is eventually absorbed. The 2013 cooling measures also moderated prices — but premiums eventually resumed their climb.

Economic Slowdown

A severe recession would reduce COE premiums, as it did in 2008-2009. But the lessons from the GFC are clear: the decline is temporary, and the recovery overshoots. The post-crisis level is always higher than the pre-crisis level because the structural forces do not disappear during a recession — they merely take a pause.

Radical Policy Change

The government could fundamentally restructure the COE system — for example, by allowing a positive vehicle growth rate, restructuring the category system, or introducing alternative allocation mechanisms. Such changes are possible but politically complex and would represent a major shift in Singapore's transport policy philosophy.

Autonomous Vehicles and Mobility-as-a-Service

In the longer term, the rise of autonomous vehicles and on-demand mobility services could reduce the desire for private car ownership. If fewer people want to own cars, COE demand would naturally decline. But this scenario is likely years or decades away from having a material impact on the market.

What This Means for Buyers

If you are waiting for COE premiums to return to $30,000, the structural analysis suggests you will be waiting indefinitely. The forces that pushed premiums from $30,000 to $120,000 are not cyclical — they are structural. They are embedded in the system's design, in Singapore's demographics, and in the global transition to electric vehicles.

This does not mean that premiums will never decline from current levels. Short-term fluctuations driven by economic sentiment, seasonal patterns, and policy changes will continue to create opportunities. But the floor under those fluctuations is much higher than it was a decade ago, and it continues to rise.

For practical guidance on timing your purchase, monitor the quota data for supply signals, track the historical trends for seasonal patterns, and use our price alerts to be notified when premiums reach your target level. Understanding the structural forces will not make COEs cheaper — but it will help you make a more informed decision about when to bid.

For a full glossary of terms used in this article — including ARF, PARF, PQP, and the category system — visit our COE glossary.